IC Cards with Cool Features

A nail-sized IC chip will replace the magnetic tape on a bank card by 2004.

You insert your IC card into an ATM at the headquarters of Chohung Bank and enter a six-digit pin number. Two bank account numbers appear on the screen as two accounts are stored in the IC card. One IC card can contain up to 10 bank accounts.

You go on to choose the “charge e-money” menu and enter “10,000 won.” Then your card is charged with the 10,000 won withdrawn from your account. This is as good as putting 10,000 won into your wallet after withdrawing the money using an ordinary bank card.

Now, you walk toward a computer in one corner of the bank. You insert your card into an IC chip reader which is connected to the computer and log on to an Internet shopping mall which accepts “K Cash,” cyber money in Korea. You pay 50 won in K Cash for a cartoon episode. You do not need to enter any of your private information since paying in K Cash is same as paying real money.

Many banks and credit card companies have recently launched IC cards. Unlike a magnetic strip, IC chips, which can store two to 32 KB of data, is hard to copy, and have multiple functions including cyber money.

Kookmin Bank’s MyQCard, which will be on the market tomorrow, has the e-bank book function for the first time in the banking industry, on top of the cash card and cyber money functions. All teller transactions can be made just by inserting an IC card into a reader installed at a teller’s window and entering a pin number. An IC card is a bank book, and a pin number is a signature.

An IC card also stores data on an online certificate for online transactions. Public PC users no longer need to invalidate a certificate every time and issue a new one. The Financial Supervisory Service required financial institutions to change the current magnetic bank cards and credit cards into IC ones by 2005 and 2008 respectively. The rule was made after a series of cases involving illegally copied magnetic cards. Following the timeline suggested by the FSS, financial institutions have launched pilot services since March and will be in full services from this month.

Woori Bank launched the IC card service on November 1. Current bank card holders can change their cards to IC cards for free by the end of this month. About 2,000 won will be charged from December.

Kookmin Bank will change current cards to MyQCards for free by the end of 2005. Chohung Bank will launch a full IC card service, which is currently in a pilot period, within this month.

Credit card companies are introducing IC chip embedded credit cards starting from Samsung Card on October 25. Credit card companies plan to replace all credit cards with IC cards.

“IC cards can provide more services unlimitedly as the concept is widespread,” said Jo Seong-oon, associate director at the Internet Banking Team of Chohung Bank. “There will be a fierce competition to develop further services as IC cards are more widely used.”

Woori Bank said, “A stock trading function or data on ID or medical records can be added through establishing a partnership.”

However, some point out the lack of infrastructure. Not too many ATMs recognize the IC chip. Only 65 percent of Koomin Bank’s ATMs and Chohung ATMs in only six branches are embedded with IC chip readers.

Seung-Jin Kim sarafina@donga.com